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FOREX: Greenback Reversing Post-FOMC Advance as Equities Surge

FOREX
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  • Amid the modest dovish Fed repricing in the wake of the softer-than-expected US PCE data, the greenback extended session losses, gradually eroding some of the gains seen in the aftermath of the hawkish Fed meeting on Wednesday.
  • The downward trajectory for the US dollar was bolstered by an impressive recovery for major equity benchmarks, with e-mini S&P 500 futures rising around 2.7% above session lows, seen shortly before the data.
  • Price action has seen strong rallies for the likes of EURUSD and GBPUSD, with the latter recovering well from the post BOE weakness that saw the pair dip below the 1.25 handle. We are currently nearer to 1.26 as we approach the weekend close.
  • The Japanese yen is the best performer in the G10, with lower US yields boosting the JPY. USDJPY (-0.9%) declines today should be taken in relation to the impressive 2.75% advance over the Fed and BOJ meetings late Wednesday/early Thursday. Additionally, we had FinMin Kato come across the wires stating he was deeply concerned about FX moves, which was followed up by Chief FX Diplomat Mimura who also expressed deep concern around FX moves. Both officials stated action would be taken if FX moves were excessive.
  • Lower than expected retail sales data in Canada prompted CAD to relatively underperform, with USDCAD remaining around 1% higher on the week at 1.4360. Canadian GDP data headlines the Monday economic calendar. US consumer confidence will also cross.
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  • Amid the modest dovish Fed repricing in the wake of the softer-than-expected US PCE data, the greenback extended session losses, gradually eroding some of the gains seen in the aftermath of the hawkish Fed meeting on Wednesday.
  • The downward trajectory for the US dollar was bolstered by an impressive recovery for major equity benchmarks, with e-mini S&P 500 futures rising around 2.7% above session lows, seen shortly before the data.
  • Price action has seen strong rallies for the likes of EURUSD and GBPUSD, with the latter recovering well from the post BOE weakness that saw the pair dip below the 1.25 handle. We are currently nearer to 1.26 as we approach the weekend close.
  • The Japanese yen is the best performer in the G10, with lower US yields boosting the JPY. USDJPY (-0.9%) declines today should be taken in relation to the impressive 2.75% advance over the Fed and BOJ meetings late Wednesday/early Thursday. Additionally, we had FinMin Kato come across the wires stating he was deeply concerned about FX moves, which was followed up by Chief FX Diplomat Mimura who also expressed deep concern around FX moves. Both officials stated action would be taken if FX moves were excessive.
  • Lower than expected retail sales data in Canada prompted CAD to relatively underperform, with USDCAD remaining around 1% higher on the week at 1.4360. Canadian GDP data headlines the Monday economic calendar. US consumer confidence will also cross.